The Application Form

If “the first line of defense against bad tenants is having an adequate application form,” how strong is your defense? Are you confident your application form asks the right questions? Are there enough questions to provide sufficient information to begin screening? Are all the questions legal?

Your application form is a key document in filling your vacancies. Through the questions you ask and the information you receive, you begin the process of screening and selection of your next tenant. How well both wants and needs of a landlord and an applicant are matched can indicate the likelihood of a good tenant. If your rental application does not ask all the questions needed to qualify applicants under your rental policies you increase your business risk and your vacancy costs.

As prospective tenants begin their search for a rental unit they rely upon the landlord to market the property in good faith, providing enough information about the property features and rental policies to guide them in their decision to submit an application. The telephone call, open house, and/or drive-by offer an opportunity for both parties to preliminarily screen each other. From the prospect’s side, does it seem likely that this property could become home? From the landlord’s side, does it seem that this prospect could meet rental qualifications and take good care of the landlord’s valuable property?

All interaction between landlord and prospective applicant, formal or informal, is a part of tenant screening. Experienced landlords know that the more information provided upfront regarding application procedures, rental policies, house rules, and deposits, the better the chance that an applicant will meet those requirements. Those prospects that do submit an application have taken the next step in their rental search. They want to be your next tenant. Your job is to decide which applicant is most likely to be a good tenant.
Take a fresh look at your application form. Is your form a “boilerplate special” straight from the office supply store? Is it a borrowed copy of another landlord’s application form? Is it a downloaded copy from the Internet? All forms are not created equal and one size does not fit all. Accordingly, you should customize all your rental forms – particularly your application form and lease agreement – to fit your specific property type and business needs and to meet federal, state, and local laws.

Read through your form carefully and proof it for grammar and spelling. Make sure your copies are clean and legible and that blanks provide enough space for the expected information. Attention paid to such small details can work to your advantage, particularly in competitive markets. For some prospects it might be a deciding factor in their decision to submit an application. They may be just the kind of applicant/tenants that you want in your rental unit.

The best way to test your form is to complete it yourself. Answer the questions on your application form as they are written. Although you know what you mean, will applicants know what you mean? If applicants have to guess at what you want you probably aren’t getting the information you really need to adequately screen them for tenancy. You need to make sure that the questions are understandable to a significant majority of applicants. You can deal with a few exceptions as they arise.

Think back to the last several applications you received. Did you have to clarify questions? Find that you didn’t get enough information the first time and had to ask for more? A good form will lead the applicant to complete the application in an organized manner by having the questions grouped by category with a logical flow.

Keep in mind that if you don’t ask, they don’t tell. That doesn’t mean you can’t find out, but your time is money and extending the period of screening and selection wastes valuable resources.
On the other hand, you can ask for the moon, but you might not get it, it might not be legal, and/or you may not really need it. The rule is not to collect more than you need, but to collect enough information so that you can adequately screen for risk. While it is true that it is your business and you have the right to collect certain information, be sure to understand all applicable laws including fair housing, landlord-tenant, and consumer protection laws, including federal, state, and local fair credit reporting laws. There is a fine line between wanting the applicant to disclose all details of his personal and professional life and the responsibilities associated with collecting sensitive personal identifying information.

The information you collect imposes the responsibility not only to use it in accordance with all laws, but to also safeguard that information throughout the length of the tenancy and the necessary document retention period and to properly dispose of it when no longer needed.

The questions that you ask should be pertinent to qualifying for rental housing and should be universal to all applicants. That is, the same questions will be asked of anyone that applies, the same consideration given to responses received, and the same type of screening will be conducted of anyone that applies. The entire tenant screening process should be conducted in a non-discriminatory manner and in accordance with applicable laws.

An adequate form is one that requires the applicant to provide information that can be used to verify his identity, obtain a credit report, verify employment and wages, verify other sources of income, contact previous landlords regarding rental history, check eviction records, perform a criminal background check, verify bank accounts, and interview personal references. A good form in itself and the associated collected information are also useful even after a tenant has departed from your property if it becomes necessary to track the tenant in order to collect a debt related to his/her tenancy.

Some prospects take the position that an application form infringes on the individual’s right to privacy. However, information that confirms suitability as a tenant – such as credit record, employment, and rental histories – Is a legitimate business purpose as defined under the Federal Fair Credit Reporting Act. Landlords must determine the most cost effective means to obtain information needed to safeguard the income property and the safety of others. The application form satisfactorily performs that function.
The prospect should also be advised that two forms of personal identification, with at least one being a government-issued photo ID, should be required for review prior to submission of the application. The end result of screening a fraudulent applicant can be worse than having done no screening at all. A photo copy of the identification forms presented should be kept in the applicant’s rental file.

A social security number is important for verifying identity and obtaining various tenant screening reports. It is permissible for an applicant to be asked to divulge their Social Security number as part of the application screening process and it is legal to refuse consideration of an application or to deny an applicant simply because the applicant refuses to provide the number.

The application should also warn that failure to provide all items of information being requested (unless not applicable) or providing incomplete or inaccurate information are in themselves grounds for not considering the application or for denying the applicant.

Each adult (18 and over or emancipated minor) applicant should be required to complete an application. This policy should include both spouses in family household or each roommate in a group living arrangement.
The application form itself or a separate “consent to release information” form must contain statements that authorize the landlord to verify credit, employment, and any other information, including that contained on the application, from a credit bureau, from the creditors directly, from employers, financial institutions, and previous landlords, and from providers of eviction and criminal records. Included should be a statement that the permission includes obtaining updated reports, survives the expiration of tenancy, and can be used for any legal purpose associated with the tenancy.

The address of the rental property, rental term, and any amounts due at signing should also be shown on the application form or an attached sheet. With the applicant’s signature, this serves as confirmation of any oral discussion regarding those issues that might have occurred prior to the application date.

Finally, some rental applications include a section to be completed by the landlord to show date and time the application was received and any processing fees collected at time of application. Many experts advise the landlords select the first qualified applicant rather than the most qualified applicant to reduce the risk of a discrimination claim, so showing when the application was received provides some protection when following this advice.

This entry was posted on April, 2010 and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.